Universal Electronics Reports Third Quarter 2017 Financial Results

Paul Arling, UEI’s chairman and CEO, stated, “During the third quarter,
our home security products performed well and we expect sales in this
category to continue to ramp nicely both in the fourth quarter and next
year. While the transition to higher end platforms continues to support
growth in our core business, this growth was offset by softer than
typical shipments to some of our domestic subscription broadcasting
customers. We expect this effect to be temporal as evidenced by our
guidance for the fourth quarter of 2017, which reflects anticipated net
sales growth of between 7% and 12%, representing higher average selling
prices for our advanced technologies and the continued adoption of smart
devices. We are more excited than ever about what is in store for UEI in
the years ahead.”

Financial Results for the Three Months Ended
September 30: 2017 Compared to 2016

GAAP net income was $1.7 million, or $0.12 per diluted share, compared
to $7.8 million or $0.53 per diluted share; Adjusted Non-GAAP net
income was $11.9 million, or $0.81 per diluted share, compared to
$13.8 million, or $0.93 per diluted share.

At September 30, 2017, cash and cash equivalents were $48.6 million,
compared to $50.6 million at December 31, 2016.

Financial Results for the Nine Months Ended
September 30: 2017 Compared to 2016

GAAP net income was $6.5 million, or $0.44 per diluted share, compared
to $17.1 million or $1.16 per diluted share; Adjusted Non-GAAP net
income was $32.4 million, or $2.21 per diluted share, compared to
$31.5 million, or $2.14 per diluted share.

Financial Outlook

Bryan Hackworth, UEI’s CFO, stated, “We are excited about the influx of
new, more complex devices, albeit the surge is creating manufacturing
inefficiencies at a time when we are completing the transition of
activities from our southern China factory to our other China factories.
We expect this will create near-term margin pressure, which is embedded
in our fourth quarter 2017 guidance. While a temporary setback, we
continue to believe relocating to a talent rich region will deliver
long-term benefits. We expect transitionary impacts to diminish and
ultimately be eliminated into 2018, supporting stronger bottom-line
growth rates.”

For the fourth quarter of 2017, the company expects GAAP net sales to
range between $172 million and $180 million, compared to $160.5 million
in the fourth quarter of 2016. GAAP earnings per diluted share for the
fourth quarter of 2017 is expected to range from $0.07 to $0.17,
compared to GAAP earnings per diluted share of $0.22 in the fourth
quarter of 2016.

For the fourth quarter of 2017, the company expects Adjusted Non-GAAP
net sales to range between $172 million and $180 million, compared to
$160.1 million in the fourth quarter of 2016. Adjusted Non-GAAP earnings
per diluted share are expected to range from $0.55 to $0.65, compared to
Adjusted Non-GAAP earnings per diluted share of $0.74 in the fourth
quarter of 2016. The fourth quarter Adjusted Non-GAAP earnings per
diluted share estimate excludes $0.48 per share related to stock-based
compensation, amortization of acquired intangibles, excess manufacturing
costs from a factory transition between our Chinese factories, severance
related to the consolidation of manufacturing facilities, changes in
contingent consideration related to acquisitions, and income tax
adjustments.

Conference Call Information

UEI’s management team will hold a conference call today, Thursday,
November 2, 2017 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its third
quarter 2017 earnings results, review recent activity and answer
questions. To access the call in the U.S. please dial 877-843-0414, and
for international calls dial 315-625-3071 approximately 10 minutes prior
to the start of the conference. The conference ID is 1725614. The
conference call will also be broadcast live at www.uei.com
where it will be available for replay for one year. In addition, a
replay will be available via telephone for two business days beginning
two hours after the call. To listen to the replay, in the U.S. please
dial 855-859-2056, and internationally dial 404-537-3406. The access
code is 1725614.

Use of Non-GAAP Financial Metrics

In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, UEI provides Adjusted Non-GAAP
information as additional information for its operating
results. References to Adjusted Non-GAAP information are to non-GAAP
financial measures. These measures are not required by, in accordance
with, or an alternative for, GAAP and may be different from non-GAAP
financial measures used by other companies. UEI’s management uses these
measures for reviewing the financial results of UEI, for budget planning
purposes, and for making operational and financial decisions and
believes that providing these non-GAAP financial measures to investors,
as a supplement to GAAP financial measures, helps investors evaluate
UEI’s core operating and financial performance and business trends
consistent with how management evaluates such performance and trends.
Additionally, management believes these measures facilitate comparisons
with the core operating and financial results and business trends of
competitors and other companies.

Adjusted Non-GAAP net sales is defined as net sales excluding the impact
of stock-based compensation for performance-based warrants. Adjusted
Non-GAAP gross profit is defined as gross profit excluding stock-based
compensation expense, cost of goods sold and depreciation expense
related to the increase in inventories and fixed assets from cost to
fair market value resulting from acquisitions, amortization of
intangibles acquired, and excess manufacturing costs. Adjusted Non-GAAP
operating expenses are defined as operating expenses excluding
amortization of intangibles acquired, stock-based compensation expense,
employee related restructuring costs, litigation settlement costs and
changes in contingent consideration related to acquisitions as well as
other acquisition related costs and nonrecurring items. Adjusted
Non-GAAP net income is defined as net income excluding the
aforementioned items, foreign currency gains and losses, and the related
tax effects of all adjustments, as well as the income tax effects of
nondeductible projected losses to be incurred as a result of the
shutdown of the company's Guangzhou factory and the effect of net
deferred tax asset adjustments related to tax incentives at one of our
other China factories. Adjusted Non-GAAP diluted earnings per share
attributable to Universal Electronics Inc. is calculated using Adjusted
Non-GAAP net income attributable to Universal Electronics Inc. A
reconciliation of these financial measures to the most directly
comparable GAAP financial measures is included at the end of this press
release.

About Universal Electronics

Universal Electronics Inc. is the worldwide leader in universal control
and sensing technologies for the smart home. For more information,
please visit www.uei.com/about.

Note on Forward-looking Statements

This press release and accompanying schedules contain "forward-looking
statements" within the meaning of federal securities laws, including net
sales, profit margin and earnings trends, estimates and assumptions; our
expectations about new product introductions; and similar statements
concerning anticipated future events and expectations that are not
historical facts. We caution you that these statements are not
guarantees of future performance and are subject to numerous risks and
uncertainties, including those we identify below and other risk factors
that we identify in our most recent annual report on Form 10-K and the
periodic reports filed thereafter. Risks that could affect
forward-looking statements in this press release include changes in
market conditions; the continued adoption of our advanced control
technologies by our customers as anticipated by management; the
convergence of smart home devices and technologies as anticipated by
management; the pace of the economy; competitive conditions in the
industries we serve, including the smart home and residential and
commercial security industries; and relationships with our customers and
our ability to attract new customers; our ability to successfully and
profitably transition our manufacturing operations, and our continued
ability to maintain and/or improve our margins and cost effective
operations. Any of these factors could cause actual results to differ
materially from the expectations we express or imply in this press
release. We make these forward-looking statements as of November 2,
2017. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.

Consists of depreciation related to the mark-up from cost to fair
value of fixed assets acquired in business combinations as well as
the effect of fair value adjustments to inventories acquired in
business combinations that sold through during the period.

(2)

Excess manufacturing costs incurred resulting from the transition of
manufacturing activities from our Guangzhou factory to our other
three China factories.

(3)

2017 amounts represent the tax effect of projected losses to be
incurred as a result of the shutdown of our Guangzhou factory. These
losses will not provide future tax benefits due to this entity
ceasing operations and as a result, not generating future taxable
income. 2016 amounts reflect the effect of net deferred tax asset
adjustments resulting from a lower statutory tax rate due to tax
incentives at one of our China factories.